Severn Corporation Prepares Its Statement of Cash Flows Using the Direct

Multiple Choice

Severn Corporation prepares its statement of cash flows using the direct method.Last year,Severn reported Income Tax Expense of $27,000.At the beginning of last year,Severn had a $2,000 balance in the Income Taxes Payable account.At the end of last year,Severn had a $5,000 balance in the account.On its statement of cash flows for last year,what amount should Severn have shown for its Income Tax Expense adjusted to a cash basis (i.e. ,income taxes paid) ?

A) $20,000
B) $22,000
C) $24,000
D) $30,000